All Forum Posts by: Eric Fernwood

If you're considering purchasing turnkey properties, this post is for you.

Turnkey is only a purchase method. Using Turnkey does not reduce the time or effort required for due diligence. Turnkey is simply an alternative purchase method to direct purchase.

Where Does Turnkey Fit in the Passive Income Process?

After:

• Location selection
• Tenant selection
• Property profile defined

Location Selection

The first step is to select an investment location. Investment location is your most important decision, not the property.

Select a location based on

• Metro area population size greater than 1M
• Both state and metro populations are increasing
• Low crime
• Low operating cost
• Rents consistently kept pace with inflation

Tenant Segment Selection

Before selecting a property, you need to decide which tenant segment you want to occupy it.

A rental property is only as good as the tenant who occupies it. You need your property to be continuously occupied by a "good" tenant. A good tenant is someone who stays for many years, always pays rent on time, and takes care of the property.

Good tenants are the exception, not the norm.

Target a tenant segment with a high concentration of good renters to increase the likelihood of consistently getting good tenants. Locate this segment through property manager interviews.

Once you have identified this segment, determine what and where they are currently renting. Based on these properties, create a property profile, like the one below.

• Rent range: $1,500 - $1,900
• Type: Single-family
• Configuration: 3+ bedrooms, 2+ baths, 2+ car garage
• Stories: One or two.
• Location: North of the river, east of Vine Rd.
• Size: 1,200 to 2,100 SF

To translate the rate range into a property price range, find conforming properties on a real estate website and their sale price.

With a property profile, you know exactly what to buy.

Determine the Best Purchase Method

The next step is to determine the purchase method. The chart below outlines the process for selecting between turkey or direct purchase.

Turnkey Due Diligence

Below are some essential due diligence questions to consider when purchasing a turnkey property. These questions are necessary because some turnkey purchase contracts limit your options, and it's important to verify critical information.

• You must be allowed to have an independent property inspection.
• If you are not satisfied with the turnkey’s property management, you must be allowed to move your property to another property manager.
• You must be allowed to get multiple bids on expensive repairs. You choose the vendor.
• No percentage markup on repairs.
• Determine the fair market rent for the property. Does it match what the turnkey is stating?
• They must provide all disclosures from the prior owner of the property.
• They must provide the results of any code inspections.

If the turnkey does not provide/allow for all of the above, either find a different turnkey vendor that does or make a direct purchase instead.

Turnkey Purchase Convenience Cost

Turnkey properties are almost always more expensive than direct purchases. See the diagram below why a turnkey purchase will always cost more.

If you choose to purchase a turnkey property, you will pay more and receive a lower return on investment. However, you will save time compared to a direct purchase.

Summary

• Turnkey is only a purchase method.
• Due diligence remains the same.
• Turnkey properties cost more than direct purchases.
• The higher turnkey price reduces your returns.

Hello @Agatha Michalak,

“Live where you like but invest where you can make money.”

Your financial goal determines what and where you want to buy. For most people, the goal is financial independence. To achieve and maintain financial independence, you need a passive income that keeps pace with inflation and lasts a long time.

To accomplish this, it's necessary to choose the appropriate location and property.

• The location determines all long-term income characteristics, including whether rents will keep up with inflation and how long the income will continue.
• Each property defines a specific tenant segment, and the segment determines income reliability.

In this post, I will discuss location and property selection.

Location Selection

Your financial future is tied to the economic future of the metropolitan area where your investment is located. Fortunately, there are straightforward metrics to help with location selection. Below are three.

• Metro area population size greater than 1M. Small towns may rely too much on a single business or market segment. Wikipedia
• Both state and metro populations are increasing. Do not buy anywhere if the state or metro populations are static or decreasing. Wikipedia
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.

If you would like a complete list of location selection requirements, let me know.

Property Selection

The reliability of your income depends upon having a reliable tenant continuously occupy your property. A reliable tenant is someone who stays many years, pays all the rent on schedule, and takes care of the property. Search tenants are the exception, not the norm.

Select a tenant segment with a high concentration of reliable tenants to increase the likelihood of always having a reliable tenant in your property. You can find this segment by interviewing multiple property managers.

Once you determine the segment you want to target, identify their housing requirements. Understanding the specific housing needs of each segment is critical, as tenants will only rent properties that meet all of their requirements.

Below is an example of a segment's housing requirements.

• Property type: Single Family
• Location: North of the river and east of 14th St within 10 miles of the city center.
• Rent range: $1,600 to $2,000
• Configuration: 3 or 4 bedrooms, 2+ car garage, one or two-story, 1,200 to 2,000 SF, 3,000+ SF Lot

You need a property description that you can hand to any realtor so they can find conforming properties. To accomplish this, you must translate the rental range into a property price range. Search for rental properties that meet your target segment's requirements on any real estate website. Once you locate conforming properties, search for similar properties that are for sale or have recently sold. This will provide you with a price range for conforming properties.

Summary

Your financial future is tied to the economic future of the metropolitan area where your investment property is located. The reliability of your income depends upon having a reliable tenant occupy your property. To choose properties that provide inflation compensation and a long-lasting income stream, follow the approach outlined above.

Hello @Becca F.,

I will comment on three points.

Do Not Depend on the Rent-Price Ratio

People compare properties using the rent-price ratio. However, you cannot rely upon this because it provides invalid information in most circumstances. To demonstrate this, I will use part of an article I wrote a few years ago. The article concerned the impact of taxes and insurance on profitability. In the article, I compared two similar properties in different locations, Las Vegas and Austin.

As you can see, once you take property tax and insurance costs into consideration, the Las Vegas property is far better than the Austin property.

Below is the results of using the rent price ratio on the two properties.

• Austin: (1700 x 12)/252500 = 8%
• Las Vegas: (1500 x 12)/255000 = 7%

The rent-price ratio indicates that the Austin property is a better investment. However, this metric failed because it does not include taxes and insurance. So, be aware of the limitations of the rent price ratio.

Good Suburbs

There will always be good suburbs, but the question is whether the residents are renters or homeowners. In Las Vegas, rental properties priced above about $500,000 have an average length of stay of less than 2 years. Consequently, these properties are poor investments.

All 480+ investment properties we have delivered are A Class or B+ Class and target a single, narrow tenant segment. Currently, these properties sell for between $320,000 and $475,000. How have these properties performed over the last 15+ years?

• The average tenant stay is over 5 years
• Out of a tenant population of over 1,000, we've had six evictions in the last 15 years
• During the 2008 crash, our clients had zero decreases in rent and zero vacancies. Property prices plunged but their rental income was unchanged.
• COVID - Almost no impact.
• Addiction moratorium - Almost no impact.

The process we used was to select a tenant segment that has a high concentration of good tenants. I define a good tenant as someone who stays many years, pays the rent on schedule, and takes care of the property. Once you identify this segment (through property manager interviews. DM me if you want sample interview questions), buy properties that are similar to what they are renting today.

Your Financial Future Is Tied to the Metro's Economy

The long-term rental income performance of a property is determined by the long-term economic performance of the city where the property is located. If you plan to hold the property for many years, how the property performs over the long term is more important than how it performs on the first day or even the first year.

Unfortunately, return calculations only predict how a property is likely to perform on the first day under ideal conditions; they do not provide information about the future. But there are good indicators of how the economy is likely to perform in the future. Below are two examples.

• Rent growth and appreciation - Rents and prices are both driven by supply and demand. If there are more buyers than sellers, prices rise. If there are more sellers than buyers, prices fall or remain the same. Therefore, unless demand is increasing, the rents you receive will rise slowly and you will continuously lose buying power due to inflation. The best indicator of demand is population growth at the state and metro levels. If both the state and metro populations are increasing, that is an indicator of future price and rent increases. Conversely, if the state and metro populations are static or falling, that is an indicator that there will be little to no future rent and price increases. In summary, do not invest in a location unless both state and metro populations are increasing.
• Income reliability - The value of a rental property is no better than the jobs around it. However, it's not just the jobs they have today. The average life of a corporation is only 10 years, and the average life of an S&P 500 company is 18 years and decreasing. This means that every job your tenants have today will likely disappear over time. Unless new companies are moving into the area and creating new jobs that require similar skills and pay similar wages, the only jobs that will be available are low-paid service sector jobs. However, companies can set up new operations almost anywhere and will not choose high-crime cities. As more people work service sector jobs, the area's average incomes decline. City services (schools, fire, police, etc.) depend upon property taxes and sales taxes. As the area income decreases, city revenues fall. Cities then have no choice but to cut back on city services. As city services fall, schools decline, and crime increases. People with sufficient income will move to a safe suburb or to another city, further decreasing the area's average income. This is a financial death spiral for a city that few have ever escaped from. Two good indicators of economic health are the unemployment rate and the inflation-adjusted median household income trend. You can obtain median household income data from the St. Louis Federal Reserve’s website.

I hope all of this makes sense. If it doesn't, please let me know.

Hello @John McKee,

Good question. However, there are more options than increasing your down payment. In this post, the loan scenarios I will cover include both conventional loans and DSCR loans, which are summarized in the table below.

Conventional Loans

• Scenario #1: Suppose you buy a $400,000 property with 25% down. The cash to close is approximately $108,000, and the return is -1.57%. The three-year gain/loss will be -$152/Mo x 3Yrs = -$5,472
• Scenario #2 - Increase the amount of the down payment until you break even each month; no loss. To achieve zero cash flow, you would need to increase your down payment to 31%. The cash to close will be $130,155.
• Scenario #3 - To obtain a 6.5% interest rate with a 25% down payment, the buy-down cost will be 1.5% of the principal, or $400,000 x 75% x 1.5% = $4,500. The cash to close will be $112,500. The return on investment will be approximately 0%. Therefore, you can achieve the same result (~$0) at a lower cost with an interest rate buy-down than increasing your down payment.
• Scenario #4 - To have a 5.99% interest rate, with 25% down, the cost will be 2.5% of the principal or $400,000 x 75% x 2.5% = $7,500. The return will be +.95%. The cash to close will be $115,500.
• Scenario #5 - To have a 5.875% interest rate, with 30% down, the cost will be 1.25% of the principal or $400,000 x 70% x 1.25% = $3,500. The return will be +2.06%. The cash to close will be $131,500.

The above scenarios are just examples of what can be achieved by utilizing interest-rate buy-downs or increasing your down payment.

DSCR Loans

A DSCR (Debt Service Coverage Ratio) loan is a commercial loan that considers the income generated by a property to determine whether the borrower can repay the loan. The DSCR ratio is calculated by dividing the property's net operating income (NOI) by the total debt service (principal and interest payments).

DSCR Loan Advantages

• Lower Interest Rates: DSCR loans typically offer lower interest rates than traditional loans, depending on the property's income.

• Higher Loan Amounts: DSCR loans can provide a higher loan amount than traditional loans.

• Flexibility: DSCR loans can be used for a variety of purposes, including purchasing a property, refinancing an existing loan, or funding renovations.

• Longer Loan Terms: DSCR loans typically have longer loan terms than traditional loans.

• Lower Down Payment: DSCR loans may require a smaller down payment than traditional loans.

• Scenario #6 - 5/1 adjustable P&I with 35% down (65% LTV) (5 years fixed and adjusts every year after five years). The cost will be 2.570% of the principal or $400,000 x 65% x 2.570% = $6,682, and the debt service will be $1,708/Mo. The cash to close will be $154,682.

• Scenario #7 - Interest-only, 5/1 adjustable, 35% down (65% LTV), the cost will be 2.570% of the principal or $400,000 x 65% x 2.570% = $6,682, and the debt service will be $1,517/Mo. The cash to close will be $154,682.

• Scenario #8 - 30-year fixed rate, 35% down (65% LTV), the cost will be 2.570% of the principal or $400,000 x 65% x 2.570% = $6,682, and the debt service will be $1,730/Mo. The cash to close will be $154,682.

Summary

There are several financing scenarios that can help you buy today and still have a positive initial cash flow. Below is a summary of the scenarios:

John, I hope this post gave you some more options.

Hello @Bassma Mancilla,

Start by determining the amount of renovation you can afford by working backward from the After Repair Value (ARV) to the purchase price.

As an example, I will assume the ARV is $100,000, and you're financing with a 30-year fixed, 25% down investor loan at a 7% interest rate.

Cost Estimates

These are just placeholder numbers used for example purposes. Be sure to replace them with your actual numbers.

• Down payment: $80,000 x 25% = $20,000
• Closing costs (assume 2% of the loan amount): $80,000 x (1-25%) x 2% = $1,200
• Monthly debt service: $400/Mo.
• Monthly property tax (assuming a 1% rate): $80,000 x 1% / 12 = $67/Mo.
• Insurance (Assume $400/Yr): $400 / 12 = $33/Mo.
• Utility cost during renovation: $150/Mo.

Estimate Your Monthly Carrying Cost

• Debt service: $400/Mo.
• Property tax: $67/Mo.
• Insurance: $33/Mo.
• Utilities: $150

The total carrying cost is $650/Mo.

I will assume 2 months to renovate, and 2 months to rent the property, so the total carrying time is 4 months.

What is the maximum renovation cost that these numbers allow?

Maximum Renovation = ARV - Purchase Price - Closing Costs - Carrying Cost x Months Carried

Maximum Renovation = $100,000 - $80,000 - $1,200 - 4 Mo x $650 = $16,200

While the above example is oversimplified, it illustrates how you can estimate the maximum amount you can spend on renovation while staying within the $100,000 after-repair value (ARV). Always include a cost pad to account for any unexpected expenses that may arise during the renovation.

This process can also be used to determine the maximum purchase price you can afford once you know the ARV and the renovation cost to reach the ARV condition. A competent realtor and a trustworthy contractor or handyman are critical.

What to Renovate?

I would renovate items in the following order.

• Health and safety - You must provide your tenants with a safe living environment. Plus, not correcting all health and safety issues are likely to result in injuries and litigation.
• Systems - This includes what is necessary to make the house habitable, such as HVAC, roof, appliances, plumbing, electrical, water damage, etc.
• Market ready - "Market ready condition" refers to changes necessary to attract people who will pay full market rate. This is subjective and you need input from a skilled property manager.
• Enhancements - Enhancements fall into three categories.
  • Required due to market competition. For example, if there are multiple similar properties on the market and they have granite counters in the kitchen, you probably will have to have granite as well.
  • Cost-justifiable enhancements - Changes that justify their cost based on increased rent over a reasonable payback period.
  • Not cost-justifiable enhancements - If an enhancement doesn't pay for itself, it's not worth pursuing, even if it would be nice to have.

Bassma, I hope this helps.

@Sheri Fluellen - Thank you for your kind words.

@James Hamling - You are a unicorn. You have an awareness and focus that I rarely find.

My thoughts:

I completely agree with you. The key to having successful clients is to carefully select people who have the potential to be successful. It may sound cliché, but it's absolutely true. I eliminate dreamers, schemers, and those with unrealistic expectations.

The second area where you provide a lot of value is in your strategy. As Yogi Berra famously said, "If you don't know where you're going, you'll end up somewhere else."

I'm curious to know how you go about selecting properties. We’ve spent years developing our data mining software and related processes for finding properties. In Las Vegas, there are very few good rental properties, less than 0.4% of all available properties. However, finding the properties is only part of the problem. They must also be validated and carried through to production. Below is an overview of our process.

James, let’s stay in touch. There are not a lot of unicorns around.

Hello @Colin Orlowski,

We've completed over 480 renovations, and I've got the scars to show for it. I decided to divide my answer to your post into two parts: what to renovate, and lessons learned.

What to Renovate

The renovation items depend on your target tenant segment. Below is a graphic showing how you decide which items to renovate.

Essentially, compare the current condition of the property with the ideal condition as perceived by your target tenant segment. The changes necessary to approach the ideal condition become your initial renovation list. However, you can't afford to do everything. You need to prioritize where you spend your money. I divide renovation items into three categories.

Systems - Required

All systems must function correctly. Systems include HVAC, plumbing, electrical, roof, foundation, windows, etc.

Health and Safety - Required

It is important to provide a safe environment, which includes items such as smoke detectors, transition strips, trip hazard removal, lock rekeying, and more to ensure a safe environment.

Items Necessary to Attract Your Target Tenant Segment - Required

If you want to attract a specific tenant segment to occupy your property, it has to match their housing requirements. You will fulfill most of the requirements when you purchase the property. However, you may need to modify the property in order to be attractive to the right segment. For example, if similar properties renting to the same segment have granite kitchen counters, having laminate counters could reduce the rent significantly and increase the time to rent. You have to do the items to attract your target tenant segment.

Market Ready

Market ready is the condition where the vast majority of your target tenant pool segment is willing to pay full market value. Anything beyond this condition is a waste of money and will not increase the rent significantly. For example, I noticed a rental property remained on the market for an exceptionally long time. Looking at the rental history, I noticed that the original asking rent was roughly 20% higher than the typical rent in the area. Intrigued, I visited the property. The house had travertine floors and Bosch appliances. My guess is that the owners spent $20,000 or $30,000 more on unnecessary upgrades. They probably believed that by making the property more luxurious, it would rent for a much higher price. The property was finally rented for about $50/Mo more than similar properties without all the upgrades.

Materials & Demographics

The materials you use must match your demographic. For example, if your target demographic is young families with small children, put LVP in all the high-traffic areas. Especially the family room.

Another example, we generally put commercial-grade carpet in the bedrooms. If the property will be used for house tacking, we put LVP in the bedrooms so that the renovation cost between renters is minimized.

Renovation Creep

Too often, property owners want to improve their properties according to their personal tastes. They begin with our standard renovation components but then rationalize that they can improve the quality of certain aspects for only a small additional cost. Rinse and repeat. This can cause delays in putting the property on the market and increase renovation costs. Remember, the only people that matter are your target tenant segment.

Lessons Learned

We’ve completed hundreds of renovations and worked with many licensed contractors and handymen. Here are some of the lessons we've learned.

• 50% upfront and 50% upon acceptance - I have had contractors and others tell me that it is standard practice to pay 75% or 100% upfront, but I will only pay 50% upfront and the balance after acceptance. I have to hold money back until the work is completed or, it will never get done.
• Acceptance - During final acceptance, we go through the property inch by inch to check that everything has been done according to the work order. If only a few small items are left incomplete, I will withhold $500 and pay the rest upon completion. I don't release all the money until the property is rent-ready.
• Permits - Do not try to skip permits. Unpermitted work can end up costing far more than the cost of the permits themselves. For instance, if someone wires up a house without a permit, the insurance company may refuse to pay in case of a fire. Or, if a tenant is injured and you did not have the proper permits, they would have strong grounds for a lawsuit.
• Price is no indication of quality or timeliness. - I have worked with many licensed contractors, and almost without exception, their prices were high, their quality was poor, and their ability to meet schedules was practically nonexistent. The problem was that our renovations, which typically cost between $15,000 and $25,000, were too small to interest them. As a result, we ended up with a crew that nobody else wanted. And, if they had a bigger job, they simply pulled the crew off my jobs.
• Use appropriate vendors - We use Handyman when feasible and only use licensed contractors when needed. The handyman service we work with has completed over 250 renovations for us, and they do excellent work. We only work with licensed contractors for special skills such as plumbing, HVAC, roofers, and electricians. Over time we've developed good working relationships with many of these trades.
• Contracts - Everything must be in writing, including the start date, duration, paint brand & colors, materials included, and permits as needed. etc. An example will clarify the problem I have not specifying specific materials. Several years ago, I just specified a ceiling fan, but did not supply the specific make and model. Below is what I envisioned.

Below is what was installed.

What happened was that the price for installation and purchase of the fan was fixed. The contractor used the lowest-cost fan they could find so that they could make more money. The lesson here is that you need to specify everything or plan on receiving something you did not want.

• No Drugs, Smoking, or Alcohol on Site - I've kicked multiple contractors off sites because the workers or the supervisor showed up intoxicated or stoned on drugs. I've also found workers smoking in a property under renovation. Removing the smell of smoke is expensive, and I learned to have in writing in the work order or contract, "No Drugs, Smoking, or Alcohol Allowed on Site."
• Licensed and insured - When working with contractors or handymen, I require a copy of their license and proof of insurance to be part of the quote. This has become a challenge on more than one occasion. The contractor or handyman would say they are licensed and insured. But, when I asked for proof, they would get upset and never show up again. Why does this matter? If they are not insured, and one of their workers gets hurt on site, they will likely sue you, the property owner.
• Fixed price - No matter how low the hourly wage is, you cannot afford to pay someone to work by the hour. We only do things by fixed price. The estimate contains a number of line items, each line item is a specific and identifiable task. Overall, we expect the work to be completed at their agreed price.
• Overwatch - I cannot emphasize the following enough. Unless you have a person with construction experience who goes on-site at least every other day, your job will take a long time to complete, the quality will be poor, and the price will go up. We have a dedicated team member who goes on-site every other day.

Colin, reach out if you have questions.

Hello @Sean Link,

You have learned a lesson that many others have as well. There are two categories of realtors. I will describe each one and then explain how to find an investment realtor.

Residential Realtors (and “investor-friendly realtors”)

Residential realtors sell homes using a simple process. Homebuyers select properties of interest. the realtor sends MLS data sheets and provides access to those properties. Once a property is selected, the realtor facilitates the offer and closing of the sale.

Although some residential realtors sell properties that can become investments, the buyer does all the work. The buyer selects the properties, the realtor sends MLS data sheets, provides access, and facilitates the offer and close. The buyer does everything else. A residential realtor adds almost no value to investment properties.

Investment Realtors

While there are usually thousands of residential realtors in a city, there are usually only one or two investment realtors. Investment realtors must understand finance, market trends, property evaluations, analytics, tenant pool selection information, renovation resources, and more. Investment realtors always work with a team. Once you find a good investment realtor you have all the resources you're going to need.

The following is a comparison between the information provided by a residential realtor and that provided by an investment realtor.

How to Find an Investment Realtor

Start by compiling a list of candidates. Get names from

• Real estate investing websites (such as Biggerpockets.com)
• Property managers
• Local investors
• Talk to real estate brokers
• Google searches
• Local meetups

Once you have a pool of candidates, evaluate each using the following interview questions. The primary purpose of the questions is to determine the individual's character and capabilities.

Interview Questions

Before you start interviewing candidates, compose a list of 10 or fewer questions, you will not have time for more. Ask the same questions of each candidate and note each response. Below are sample questions. If the realtor fails an answer, I would probably disqualify the candidate.

• Tell me about your investment team
• Do you or have you owned investment properties?
• How many investment properties did you close in the last 12 months?
• Did you or your client select the properties?
• What were your primary selection criteria?
• Tell me about the tenant pool you target.
• Tell me about your renovation process.

If the candidate provided reasonable answers to the questions, they know what they are doing.

Hello @Garet Gavito,

Instead of simply listing locations, I will provide a straightforward process for selecting a good investment location. Before I describe the process, it is important to understand why location is so crucial.

The location of a property determines all long-term income characteristics, such as whether rents will keep pace with inflation and how long the rental income will last.

The process involves eliminating cities that are unlikely to provide long-term income that you can depend on. This is accomplished by applying multiple filters to eliminate unsuitable cities. By the end of the process, you will have a short list of cities that are worth further consideration.

• Metro area population size greater than 1M. Small towns may rely too much on a single business or market segment. Wikipedia
• Both state and metro populations are increasing. Do not buy in any location if the state or metro populations are static or decreasing. Wikipedia
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.
• Low operating cost - High operating costs can turn what appears to be a profitable property into a money pit. The three most apparent are income taxes, property taxes, and insurance. Insurance - ValuePenguin, Metro Property Taxes - LendingTree
• Low disaster risk - When a tornado or other natural disaster strikes a city, it doesn't just obliterate individual properties. It obliterates the entire community. Your tenants won't wait for your property and the community to be rebuilt. They will move immediately to a location where they can work and live today. So, even if your insurance company rebuilds your property, there may be no one to rent it to. Locations hit by natural disasters may take many years or never recover. However, your mortgage, taxes, insurance, maintenance, and other expenses will continue without interruption. The cost of homeowners insurance is the best indicator of the likelihood of a natural disaster in an area. Choose a location with low-cost homeowners insurance because they have the lowest risk of natural disasters. Insurance - ValuePenguin
• Rent control - Some states and metro areas have implemented various kinds of rent control. Rent control may prevent you from increasing the rent fast enough to keep pace with inflation. It may limit your property manager's ability to select the best tenant. It may make evictions of non-performing tenants difficult or impossible. Never invest in any location with rent control.
• Inflation compensating - Every time you go to the store, the same basket of goods costs more and more dollars. In order to have the additional dollars needed to pay inflated prices, rents must rise faster than inflation. Therefore, a critical location selection metric is that rents and prices are rising faster than inflation. Rents tend to lag behind prices, so you can use the appreciation rate if you do not have historical rental data. Zillow Research

At this point, you will have a small number of potential cities. The next step is to find a local investment team. Why is working with a local investment team critical?

Everything you learn from seminars, podcasts, books, and websites is general information. You will purchase a specific property in a specific location that is subject to specific local rental regulations. The only source of the hyperlocal information you need is a local investment team that has years of experience working with investors. Also, working with a local investment team costs no more than working with any other realtor so there is no disadvantage and every advantage to working with a local investment team. If you want details on finding a local team, DM me.

Hope this helps.

Hello @Josh Edelman,

We do not use any of the processed data from the MLS. Instead, we export raw data from the MLS and use our software to generate statistical and other information.

...Eric